Definition and Meaning
It is one of the most effective tools which is meant to be used for the senior management for raising awareness and making the risks visible so that the most appropriate decisions are made on different risks.
When the project management solutions are to be implemented, project managers along with their teams have to work on how to identify and control risk within the various levels of a project. Although there are methods like scheduling and control communications available but they are not going to be enough for managing risks. Risk impact can be better identified and controlled through the Project Risk Assessment Matrix.
It gets hard to manage risk when you see so many potential threats and you can’t seem to understand what risk to take care of first. In such a situation, risk assessment matrix comes handy. This is the most efficient project management tool that will let you view the snapshot of the potential risks. It is easy to make because the information needed can be extracted from the forms of risk assessment. The matrix lists the potential risks on the extent of the damage they can cause and the consequences they can result in.
Before designing the matrix template, the risk assessment forms are prepared. These forms include the tasks and the associated risk with each of the tasks. The risk for each task is determined, risk data is gathered, the probability is determined and the level of impact of the risk is shown along with the consequences. Then, priorities are assigned to tackle each risk and finally, the strategies for risk prevention are developed. With these details, the project team can quickly view the potential risks attached to a project and then each risk is tackled on a priority basis.
No matter what kind of project it is, the project management risk assessment will prove to be useful for any business as it brings the following benefits along:
- Increased probability of achieving the organizational objectives
- A transparent process of risk management is provided
- The information gathered is recorded and then audited
- Risk is formally recorded in a fast and effective way
- The ability of the organization for managing risk is demonstrated
In order to use the Project Risk Assessment Matrix, you must understand it as well. The matrix has two dimensions:
Probability: This one shows the probability of occurrence of risk from 0 to 100%
Consequence: It shows the impact or consequence of a risk which can be in terms of human life, cost or any other critical factor.
Every business owner or project manager needs to realize the importance of Project Management Risk Analysis for the success of a project. Even the large business organizations these days have to work on risk analysis before they plan to launch any product so that they can access the market for any potential threats that can damage or halt the success of their new launch.